Sin taxes spoil the fun

Washington state is nearing the one-year mark for its vote to legalize marijuana and the two-year anniversary of privatizing liquor sales.

I wonder, looking back on those two votes, if things have turned out the way people expected.

Privatization, by more than tripling the number of licensed retailers, has increased the sale of booze and brought in more revenue for the state.

But it’s also come with higher prices and, according to a recent report by consumer advocacy group Nerd Wallet, the highest level of taxes on alcohol in the nation. While Washington’s booming beer and wine industries are comparatively sheltered from exorbitant tax rates, taxes on spirits are nearly double the next closest state, Oregon. Washington’s beer tax is sixth-highest in the nation, while its wine tax is 20th.

Perhaps it’s a step in the right direction as far as the state budget is concerned, but it was by no means a magic cure for Washington’s economy. In my opinion, its long-term effect will be a boon to the mega-retailers while hampering the small business owners who are still trying to survive in the midst of every grocery store offering the one-stop shopping customers lust for.

On the other hand, the state has yet to see a nickel in tax revenue from marijuana sales. Although it was expected to take at least a year for policies to be put in place and retailers to be opened, I wonder how much the state and individual cities will get in the way of legalized marijuana ever becoming the economic boom it has the potential to be.

Many cities in Eastern Washington – even in areas that voted in favor of Initiative 502 – have implemented moratoriums on pot retailers. Some, I’m sure, are just giving due diligence to the legislative process, waiting for the state to finalize its stipulations and gauging possible reactions from the federal government.

Other cities, I think, are taking a “not in our house” approach, as if by preventing legal weed retailers they can prevent the drug from being used in their town. The problem with that approach is that there are already pot retailers in every single city in Washington – and quite likely just about every city in the entire nation. They’re just not the legal, state-approved kind.

The “illegal” weed industry is the No. 1 competitor to the state-run “legal” weed industry.

In theory, legalized marijuana would put run-of-the-mill drug peddlers out of business.

But cities that go the “not in our house” route will ensure job security for your friendly neighborhood weed dealers. And still without a nickel of revenue going into the state’s coffers.

Likewise, at the state level, it seems like there’s a high potential for unintentionally sabotaging the potential benefits of legalizing marijuana. Much in the same way as privatized booze, I see marijuana sales being heavily taxed.

Plus, retailers will need to sell enough product at a high-enough markup to cover the costs associated with a brick and mortar business, various licenses and insurance, employees, etc. Consumers will be the ones that foot the bill for those stores.

I don’t think the state has any intention of offering an option for a licensed, low-overhead business model where anybody with a backpack and some Ziploc bags can run a successful enterprise.

With all the bureaucracy that will go into implementing I-502 and state-approved retailers, I have a hard time believing “legal” prices will be competitive with those of the free market.

If I had been in Washington last year, I would have voted in favor in I-502 (I was still living in Oregon at that time). However, I’m extremely skeptical that its passage will produce the results people were expecting when it was put on the 2012 ballot.

Garrett Rudolph is the managing editor of The Chronicle. He can be reached at 509-826-1110 or via email at grudolph@omakchronicle.com.